Dark Patch

Retailers question marketing potential of QR codes.

Angel Abcede, Senior Editor/Tobacco, CSP

Article Preview: 

What started out as a way for automakers to identify parts in an assembly line has turned into a way for people to get free stuff by scanning posters, signs or even cup sleeves with their smartphones.

It’s called a quick response, or QR, code.

7-Eleven had one on its Slurpee machines this past summer, and it also did a special March Madness drink cup promotion that sent customers to a vendor-driven (in this case, Powerade) video about the college-basketball game that inspired the cup design.

“We have run promotions and infor­mation programs using QR codes both internally and externally; the codes are great at driving traffic and awareness,” says Scott Drake, finance and communica­tions for 7-Eleven Inc., Dallas. “We will continue to use them and are looking at some innovative uses for them, but none are currently ready for public discussion.”

And while Dallas-based 7-Eleven and many manufacturers in just the past three years have launched innovative promo­tional campaigns using QR codes—not all flawlessly, however—c-store operators in general have yet to fully embrace the idea.

“The concept has legs,” says Scott Hart­man, president of Rutter’s Farm Stores, York, Pa., and one of the first retailers in the industry to offer customers a mobile-phone app tied to his c-stores. “But I ques­tion where the technology tradeoff is vs. using something less invasive.”

Technologies exist that can ride Blue­tooth airwaves to give customers loyalty points by simply walking into a store. (See loyalty story on p. 183). Other tech­nologies can instantly send promotional messages to people’s phones as they walk past a location.

Competing alternatives to QR codes is only one barrier. Depending on how they’re executed, some of the codes need specific scanners to work, Hartman says. And lastly, not all phones have the neces­sary app to scan them. Having to down­load it may prove a stumbling block to widespread use, he says.

From an advisory standpoint, NACS’ Gray Taylor says using QR codes as a way to lead customers to a store’s website is a solid marketing tool. It’s easy to do using free downloadable programs, and with QR codes having technology standards, the experience is consistent.

Where Taylor says the waters get murky is with the codes’ evolving uses. As executive director of PCATS, the tech­nology arm of the association, Taylor says QR codes can evolve to be payment tools, taking the form of offline electronic pay­ment or coupons. But standards for these processes don’t exist—and worse, QR codes can be vehicles for viruses.

“If I send you a QR code that’s a jpeg of my headshot, I can also connect an executable [code] to that jpeg,” Taylor says. “And when you open it up, attached are 200 bytes of malware.”

But reluctance on the part of the industry doesn’t mean the pace of QR use is slowing. New York-based ScanLife, a company that provides research and services tied to QR codes, says at this time last year, its single largest QR code cam­paign attracted about 30,000 responses (or scans) during the quarter. Over the same quarter this year, that number is more than 2 million. ScanLife recorded its highest month of scans this past June at 5.3 million (the latest figure available), with numbers on a steep incline.

With what he sees as proof of QR longevity, marketing consultant Jimmy Matorin says even as recently as a few months ago, people used to think he was hallucinating when he predicted widespread use of QR codes for busi­ness-to-consumer goals. But then QR announcements came from three major corporations: Atlanta-based Coca-Cola, Oak Brook, Ill.-based McDonald’s and Pittsburgh-based Heinz Ketchup.

“If Coke, McDonald’s and Heinz are doing it, it’s not going away,” says Mato­rin, who calls himself a “business catalyst” for his company, Smartketing, based in Philadelphia.

Retailer Use

Looking like a cross between a bar code and a postage-stamp shaped Rorschach test, a QR code acts like the former in its ability to store relevant data, but like the latter in that it can hold much more. People scan it like a bar code, but using a QR scanner or smartphone.

That additional data capacity allows for more complex capabilities. While compa­nies began using the codes as URL links to their websites, the uses have grown to include providing background informa­tion, loyalty updates and links to surveys, music downloads and promotions.

QR codes can be easy to use, with free websites available to make the codes; also, Matorin says, a company can set up a “microsite” within an existing website and change the content as needed, with­out having to update the QR code already set up on signage in stores.

“Let’s say your first promotion was a signature soccer shirt,” he says. “You can later go in and change it to a soccer ball. So you just have one code, but you can change the content.” The poster would say something such as, “Scan here for weekly promotions,” and the company could update it as necessary without a new code.

Matorin recently came across a New York steakhouse menu that offered a QR code to scan that would show where the restaurant’s beef came from. That type of detail adds to the customer experience.

“I can see where people would want to get nutritional information about food,” says Hartman of Rutter’s, emphasizing that customers need a compelling reason to do the legwork. But he also acknowl­edges its potential. “Culturally, it fits a younger demographic.”

What Has Been Done

While retailers may not have QR code programs in place now, more and more c-store suppliers are engaging with the technology.

Though the QR code was invented in the mid-1990s, its alternative use caught marketing folks’ attention more than a decade later. According to Matorin, in 2009, Pittsburgh-based Dick’s Sporting Goods flashed a QR code in Dallas Cow­boys stadium in the third quarter of a college game, offering those who took a photo of the code a discounted amount on a purchase. It was one of the first memorable marketing uses of QR codes, sparking many articles and blog entries.

In September of the next year, Dear­born, Mich.-based Ford used it at the South By Southwest music festival in Austin, Texas, to raise awareness about its new Fiesta model.

This year, the three significant announcements came from Coke, McDonald’s and Heinz, Matorin says. With Coke, the beverage behemoth printed codes on its soda cans, allow­ing customers to view proprietary video content and links to sports channels.

For McDonald’s, the push was for pro­viding nutritional information. Intent on moving away from an image of high-calorie fast food, the chain this year tied nutritional information about its food to QR codes printed on packaging.

And Heinz started a cause-marketing campaign, with restaurant diners able to scan the code and send personalized messages to U.S. soldiers.

Time will tell if QR efforts are reaping the degree of engagement and participation necessary to be viable, but Matorin says more and more obstacles are giving way.

“Because more smartphones are mov­ing into the [general population] as we speak, you’re getting phones that already have the app on it,” he says. “People are getting good at ‘Scan here to win’ this or ‘Scan here’ to do that.”

Avoiding Mistakes

The history of marketing with QR codes is not without its missteps. One of the first ones involved an energy drink and billboards in subways with codes printed on them. Its marketing team failed to check the reception in many of those underground platforms.

Another business put a code on posters without a call to action. At the time, Mato­rin says, the public was not used to seeing the codes, so unless the person knew what it was, he or she wouldn’t scan it.

Matorin recalls scanning a QR code last year for another company’s promotion, only to find that it had already ended.

“All these are frustrating moments,” he says, but ones retailers can learn from.

Along the lines of errors, Taylor of PCATS says a tobacco company made the mistake of putting a QR code too close to the product’s bar code, throwing scanners off and making both unread­able. Taylor says that issue is one of evolving bar codes: New ones are trying to develop a supply-chain history, track­ing product origin. The use of QR codes by consumers creates a level of flux and uncertainty.

Matorin suggests retailers have URLs printed next to the QR codes, in case someone can’t scan the code. Another strategy is to offer text-messaging codes so interested customers can take that route.

QR codes have multiple benefits in generating customer engagement, Taylor says. For instance, a popular promotion from McDonald’s is its Monopoly game, for which people collect paper tabs pulled off cups and sandwich packaging. Instead of assembling the pieces in what could become an unwieldy mess on the kitchen table, customers can use a QR code and have the pieces assembled online. The process gives the retailer another oppor­tunity to get the customer to visit the company website.

While security precautions need to be in place, especially for contests, Taylor says it’s a great opportunity for retailers to promote, among other things, private-label items.

Future Payment

For retailers, marketing opportunities seem very tempting. But the payment opportunities may hold even more promise up through the supply chain. A QR code in a customer’s phone could be all a retailer needs to access funds or validate reimbursement of a coupon. As long as standards and security measures become solid, Taylor says, many fees and labor expenses could become obsolete.

For instance, paper coupons today have to go through a collection center where people manually handle and verify what’s turned in. A manufacturer then reimburses the retailer the 25-cent dis­count but has to pay a 7-cent service fee. That fee can disappear with QR codes, as would a costly debit or credit transaction fee if in the case of a payment, the QR code triggers a cheaper, offline automated clearing house (ACH) transaction.

Another area of clear benefit to the convenience industry would be payment size. QR codes could be instrumental in expanding the use of micro-payments. Taylor says newspapers would love to charge 10 cents for an article, but they face reluctance from consumers to use credit cards for such small amounts. So QR codes could be used for all types of small transactions.

“Nothing says [QR codes] can’t be cash someday,” he says. “It’s cool because there’s no handling involved.”

While numerous standards and pro­cesses need to be developed, Taylor and others believe QR codes will become an important part of the c-store landscape. “It’s implementable today,” he says. “Every retailer, no matter how big or small, can put a QR code on the back of a business card or on a sign in the store. It’s that simple, and you could be driving people to your website.”

Click here to download full article